Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. futura company purchases the 68.000 starters that

Futura Company purchases the 68.000 starters that it installs in its standard line of farm...

60.1K

Verified Solution

Question

Accounting

image
Futura Company purchases the 68.000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.90 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $11.70 as shown below: Per Unit Total $ 5.00 2.80 1.70 $115,600 $ 74,800 0.60 0.50 $ 34,000 $11.70 Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost 1.10 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $115,600) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $89,000 per period. Depreciation is due to obsolescence rather than wear and tear. Required: What is the financial advantage (disadvantage) of making the 68,000 starters instead of buying them from an outside supplier

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

In at least 400 of your own words, explain how the endocrine and nervous systems work...

Medical Sciences
Q

Write a java program that simulates thousands of games and then calculate the probabilities from the...

Programming
Q

Concept Map: Diversity of capacitor types used in electronics. To Do: 1) Cite 4 examples of capacitor’s use...

Electrical Engineering
Q

As of 2015, ranches were taxed at 13 percent for income up to $42,000; at 20...

Finance
Q

5 translation x y x 5 y 1 y G F H

Geometry
Q

cohol rats were genetically engineere test the hypothesis that NPY deficient genotype NPY or to...

Statistics
Q

Find dy/ du,du/ dx and dy/dxy=u^53 and u=5x^5-4x^4

Calculus
Q

Perpetual Inventory Using LIFO Beginning inventory, purchases, and sales data for portable game players are...

Accounting
Q

Question 53 (1 point) I Do = $1.25, 9 (which is constant) = 5.5%, and...

Finance
Q

The second option is to produce a hybrid electric car. The hybrid option reflects the...

Finance
Q

Problem 1 Cunningham Company sold the following two machines in 2007: Machine A Machine B...

Accounting
Q

What would you pay for a bond that pays an annual coupon of $35, has...

Finance